Ford Motor Co. (NYSE: F)’s anticipated closure of Mercury has not brought much attention from investors. Mercury has not had a unique identity during the last several years and ending the line now appears to be a timely and prudent move for the company. Market share for the Mercury line has dwindled to less than 1% of the car market and makes up less than 2% of the company’s current share price.
Some analysts have estimated that Mercury is worth about $1 billion to the Ford, whereas the company as a whole is estimated to be worth about $38 billion. Adding the fact that Ford will likely transition many of its Mercury dealers to offer Lincoln models, the fundamental impact on Ford will be minimal at best. The company has declared that the transition will not result in any job loss.
Analysts in the auto industry have suggested that Ford’s Lincoln brand isn’t positioned to take on some of the higher-volume luxury brands such as Lexus, BMW, and Mercedes. Analysts believe that Lincoln will likely continue to do best by competing with Buick, Cadillac, and Acura. Based on Lincoln’s current share of the luxury market, it’s easy to see how analysts would believe that, but they might be missing something on Ford. Ford will no longer be pitting two of its luxury lines against each other, setting the stage for a more aggressive marketing approach for the Lincoln.
The consensus rating among analysts in Ford is a “hold” rating, but the current price indicates that a sel sell off may occur soon, however, there’s a very divergent view of where Ford’s stock is heading by analysts.
